The $40 Trillion Question: Can America Escape Its Debt Trap?

If it's okay, Tom, I'll dive in a little bit quickly.

Just to personalize this, if I said to someone, your personal debt doesn't really matter, they would say, no, it does matter.

Then I would say, well, if it's $100,000, it doesn't matter at all.

Then they would say, no, it does matter because I only make $30,000 a year.

But if you're a millionaire, you see, so what I'm getting at is the first thing to recognize is you have to bring in context.

These are obligations owed.

And if you don't pay them, you go bankrupt, you can have your assets seized and things like that.

Now, the big question in public debt, which is really a standard for government debt versus personal debt, it's often thought of was governments can't go bankrupt.

And since governments actually run the bankruptcy courts, there's a certain truth to that, that they can't technically go bankrupt, but governments have defaulted on their debts.

But technical default means they don't pay principal or interest.

And if you think about why that might matter, you hold these debts.

You hold them in your mutual funds.

You hold them in your pension plans.

You hold them in the assets you hold.

So they are government bonds and securities.

Now, typically, and I'll stop at this because there's so much to say.

I'm just thinking of reasons to worry about this or reasons to care.

The same thing is true with governments as to personal, with the difference is they can print money and you can't.

I mean, you can try to print money, but that's usually counterfeiting and they'll arrest you.

But the government can't officially print money.

So here's the thing.

Government gets big.

There's only so many ways you can finance it.

Taxes is one.

But taxes don't get you elected.